Global Edition
Chapter 1
Marketing:
Creating and Capturing Customer Value
Copyright ©2014 by Pearson Education
Creating and Capturing Customer
Value
Topic Outline
1. What Is Marketing?
2. Understanding the Marketplace and Customer
Needs
3. Designing a Customer-Driven Marketing Strategy
4. Preparing an Integrated Marketing Plan and
Program
5. Building Customer Relationships
6. Capturing Value from Customers
7. The Changing Marketing Landscape
Copyright ©2014 by Pearson Education
What Is Marketing?
Marketing is…….
a process by which companies
1. create value for customers
2. build strong customer
relationships
3. capture value from customers in
return.
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MOHAMAD ZAINOL ABIDIN BIN ADAM/049285010
Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands
Needs
• States of deprivation
• Physical—food, clothing, warmth,
safety
• Social—belonging and affection
• Individual—knowledge and selfexpression
Wants
• Form that needs take as they are
shaped by culture and individual
personality
Demands
• Wants backed by buying power
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Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
Market segmentation refers to
dividing the markets into
segments of customers
Target marketing refers to which
segments to go after
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Designing a Customer-Driven
Marketing Strategy
Choosing a Value Proposition
Brand’s Value Proposition
 Set of benefits or values a
company promises to deliver to
customers to satisfy their needs
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Understanding the Marketplace
and Customer Needs
• Market offerings
– are some combination of
products, services,
information, or experiences
offered to a market to
satisfy a need or want
• Marketing myopia
– is focusing only on existing
wants and losing sight of
underlying consumer needs
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Marketing: Creating Customer Value
and Engagement
Learning Objective 1
• Define marketing and outline the steps in
the marketing process.
What Is Marketing?
- creating value for customers
- capturing value from customers
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1-8
Marketing: Creating Customer Value
and Engagement
Learning Objective 2
• Explain the importance of understanding the
marketplace and customers and identify the
five core marketplace concepts.
• Understanding the Marketplace and
Customer Needs
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1-9
Marketing Process
MOHAMAD ZAINOL ABIDIN BIN ADAM/049285010
Understanding the Marketplace
and Customer Needs
Customer Value and Satisfaction
Expectations
Customers
• Value and
satisfaction
Marketers
• Set the right level of
expectations
• Not too high or low
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MOHAMAD ZAINOL ABIDIN BIN ADAM/049285010
Understanding the Marketplace
and Customer Needs
Exchange
 the act of obtaining a desired object
from someone by offering something
in return
 Marketing actions try to create,
maintain, grow exchange relationships.
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Understanding the Marketplace
and Customer Needs
Markets are the set of actual and
potential buyers of a product
Copyright ©2014 by Pearson Education
MOHAMAD ZAINOL
ABIDIN BIN
Designing a Customer-Driven
Marketing Strategy
Marketing management is the art and
science of choosing target markets
and building profitable relationships
with them
– What customers will we serve?
– How can we best serve these
customers?
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production
concept
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Product
concept
Selling
concept
Marketing
concept
Societal
concept
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production concept
consumers will favor products
that are available and highly
affordable
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Product concept
consumers favor products that offer the
most quality, performance, and features.
Focus is on continuous product
improvements.
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Selling concept
consumers will not buy enough of
the firm’s products unless it
undertakes a large scale selling
and promotion effort
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
 Marketing concept
 knowing the needs and
wants of the target
markets and delivering
the desired satisfactions
better than competitors
do
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Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Societal marketing
 make good marketing decisions by
considering consumers’ wants and
long-term interests company’s
requirements society’s long-run
interests
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Designing a Customer Value-Driven
Marketing Strategy
Marketing Management Orientations
1-21
Designing a Customer-Driven
Marketing Strategy
Copyright ©2014 by Pearson Education
MOHAMAD ZAINOL ABIDIN BIN ADAM/049285010
Preparing an Integrated
Marketing Plan and Program
The marketing mix:
set of tools the firm uses to
implement its marketing strategy.
It includes product, price,
promotion, and place (4P’s)
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Preparing an Integrated
Marketing Plan and Program
Integrated marketing program:
comprehensive plan that
communicates and delivers the
intended value to chosen
customers.
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Marketing: Creating Customer Value
and Engagement
Learning Objective 3
• Identify the key elements of a customer-driven
marketing strategy and discuss the marketing
management orientations that guide marketing
strategy.
• Designing a Customer Value-Driven Marketing
Strategy
- Selecting Customers
- Choosing a Value Proposition
- Marketing Management Orientations
o Preparing an Integrated Marketing Plan and
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Program
1-25
Marketing: Creating Customer Value
and Engagement
Learning Objective 4
• Discuss customer relationship management and
identify strategies for creating value for
customers and capturing value from customers in
return.
Building Customer Relationships
Capturing Value from Customers
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1-26
Building Customer Relationships
Customer Relationship Management (CRM)
• The overall process of building
and maintaining profitable
customer relationships by
delivering superior customer
value and satisfaction
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Building Customer Relationships
Relationship Building Blocks:
Customer Value and Satisfaction
Customerperceived value
• The difference
between total
customer value
and total
customer cost
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Customer
satisfaction
• The extent to
which a product’s
perceived
performance
matches a
buyer’s
expectations
MOHAMAD ZAINOL ABIDIN BIN ADAM/049285010
Building Customer Relationships
Customer Relationship Levels and Tools
Basic Relationships
– low-margin
customers
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Full Partnerships
– high-margin
customers
Frequency
Marketing
Programs
– MOHAMAD
reward ZAINOL
customers
ABIDIN BIN ADAM/049285010
Building Customer Relationships
The Changing Nature of Customer
Relationships
Relating with more carefully selected
customers uses selective relationship
management to target fewer, more
profitable customers
Relating more deeply and interactively
by incorporating more interactive two
way relationships through blogs,
Websites, online communities and social
networks
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Building Customer Relationships
The Changing Nature of Customer
Relationships
Customer-managed relationships
Customers, empowered by
today’s new digital technologies,
interact with companies and each
other to shape their relationships
with brands.
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Building Customer Relationships
Partner relationship management
Involves working closely with
partners in other company
departments and outside the
company to jointly bring greater
value to customers
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Building Customer Relationships
Partner Relationship Management
Partners inside the company is
every functional area interacting
with customers
–Electronically
–Cross-functional teams
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Building Customer Relationships
Partner Relationship Management
Marketers connect with their suppliers,
channel partners, and competitors by
developing partnerships
Supply chain is a channel that stretches
from raw materials to components to final
products to final buyers
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Capturing Value from Customers
Creating Customer Loyalty and Retention
Customer lifetime value is the value
of the entire stream of purchases that
the customer would
make over a
lifetime of
patronage
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Capturing Value from Customers
Growing Share of Customer
Share of customer
the portion of the customer’s
purchasing that a company gets in
its product categories
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Capturing Value from
Customers
Customer equity
the total combined
customer lifetime
values of all of the
company’s
customers
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Capturing Value from Customers
Building Customer Equity
Building the Right Relationships with the Right
Customers
Customer
Relationship
Groups
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1-38
Capturing Value from Customers
Building Customer Equity
• Right relationships with the right
customers involves treating customers
as assets that need to be managed and
maximized
• Different types of customers require
different relationship management
strategies
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The Changing Marketing
Landscape
Changing Economic Environment
 New consumer frugality
 Marketers focus on value for
the customer
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The Changing Marketing
Landscape
Digital Age
• Online marketing is the fastestgrowing
• Click- and- mortar companies
evolved
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The Changing Marketing
Landscape
• Not-for-profit marketing
growth
• Rapid Globalization
• Sustainable marketing
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So, What Is Marketing?
Pulling It All Together
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